by Kavon Fiennes
Every so often, Jamaican politicians unleash a new “game changer”…..something so earth shattering that it will bring/take “JAMAICA” out of the economic rut. The latest announcement emerged from Mining Minister Phillip Paulwell in January. Nippon Light Metal Company is a Japanese firm which will be setting up a pilot project, under the auspices of the Jamaica Bauxite Institute (JBI), to examine the feasibility of extracting rare-earth metals/elements from the mining waste in mud lakes found in our bauxite mining communities.
This announcement has been met with a lot of fanfare both locally and overseas. Jamaica apparently has ‘God blessed dirt’ unlike anywhere else in the world according Lyew-Ayee, head of the JBI. Minister Paulwell quoted figures of the potential yield of 1500 tonnes per year in these metals which trade at US$3,500 per kg on the commodities market. This according to Paulwell “…has the potential to redefine Jamaica’s economic prospects in a positive way”.
Haven’t we heard this all before over the past 40 odd years? How many “game changers” have there been or suggested by our political leaders? There was the Spring Plains project, Cricket World Cup 2007, Haiti’s earthquake, Fever grass, IT sector, the Cassava Project, Democratic Socialism in the 1970s, et cetera, et cetera. Things are always in the pipeline and we are forever poised. ‘On your marks, get set..Oh’ rings a bell?
What we really have is an abundance of rare Earth politicians (and intellectuals) in Jamaica, who somehow believe that one industry or one find will be the magic elixir to correct our socio-economic woes. I sum it up to magical thinking.
In reality our politicians have failed to recognize that it has been their ‘Statist’ leanings (and corruption) causing our problems. The root of Jamaica’s economic crises has been the result of activities of whichever party holds the seat of power, through their constant expansion of government, onerous taxation, rampant spending and debt accumulation. Some would argue one party has been more culpable than the other.
Continuing on the theme of rare Earth politicians, I have taken my time to articulate a response to the Joint Address to the Nation on Monday Feb 11th by the Most Hon. Prime Minister, Portia Simpson-Miller and Minister of Finance the Hon. Peter Phillips (Read the transcript here). I wanted to gather my thoughts and apply some objectivity and reason to the path laid out by them to steer Jamaica towards economic growth, stability and prosperity. Had I used RightFromYaad to post response sooner, I perhaps would have been more emotive in my arguments. Alas, I shall proceed.
In essence the take home points I gathered from their joint speech (which confusingly ended with an awkward hug and kiss?!?!), were thus:
1) Default and spend the ‘savings’: The big idea to emerge was a National Debt Exchange, in other words a new Jamaica Debt Exchange (or JDX Part II). Of course this saves us only J$17 billion per year over the next 7 years, up to 2020. Something must be wrong with my ‘simple interest’ maths, we are currently $J1,700 billion in debt (plus interest), so how is less than $J120 billion in savings in interest payments over the next 7 years going to help significantly?
Of course with these ‘savings‘ the government has wiggle room ‘to do more‘ for the people. Just wait and see what mega-government projects there will be in the future. All other mega projects have been a drain on the public purse, all road and highway construction have yielded no significant increase in commercial or economic activity to date.
2) Bigger govt and more regulations: There was no mention of more/higher taxes in the speech (that came by way of an announcement in parliament, the following day). There was no mention of a reduction in the size of government (sadly, that was NOT announced in parliament the following day). They did announce more committees and advisors to make recommendations and give oversight. Any recommendations on tax reform? Reduction in government size? Cutting public sector and Ministers’ salaries? No. There are tons of reports (including the Orane and Clarke reports) gathering dust on shelves of ministries giving recommendations to reduce govt waste, improve efficiency and how to improve the lives of Jamaicans. Not one has been implemented.
3) Sacrifices: Ayn Rand is credited with the quote:“It only stands to reason that where there’s sacrifice, there’s someone collecting the sacrificial offerings. Where there’s service, there is someone being served. The man who speaks to you of sacrifice is speaking of slaves and masters, and intends to be the master.” Can there be any greater description of what role the government of Jamaica intends to play? The government has asked us, the taxpayer, to sacrifice. I say no more, it’s self explanatory.
4) Accumulate More Debt: What does the IMF deal mean for Jamaica?…. As I understand mathematics, the US$750 million deal inked with IMF yesterday is a loan. This loan is to be repaid in 48 months. Unless my arithmetic is wrong…that means we just accumulated approx J$72 billion more in debt plus interest!
In essence, we have all been waiting to exhale for this solution to our debt, deficit and spending problem…and that is….wait for it!!…..to accumulate more debt….hasmh! (holding and shaking my head!)
For the common man all of this is a charade to give him hope, akin to pumping up “Brand Jamaica”. They want all “JAMAICA” to buy into this roadmap to economic prosperity, but it will amount to naught. I have already suggested a way to cut government spending and an economic model as the way forward for the country. We have been here before.
Only in the minds of our special Jamaican breed of “Rare Earth Politicians” does this fuzzy math equate to growth in the economy. I would not be surprised if there will be need to default…Ahem! (clearing my throat)…. I mean repeat another ‘successful’ debt exchange (JDX Part III) in 2015/2016.
The rationale for all of this is illogical, and is probably deeply rooted in a flawed Keynesian Central Planning Economic model, where the government alone knows best how to get economic growth and not a free market with free people operating in that market. Central planning is the predominant economic model of governments of countries experiencing economic crises around the globe….maybe our guys aren’t so rare after all.
Kavon Fiennes is creator of the RightFromYaad blog. He is a 30-something year old ‘Black’, sometimes ‘Brown’, Jamaican. He is a former socialist, nationalist and Democrat, turned Libertarian and semi-conservative since his mid 20′s. He still holds lingering left-wing views on the way society ought to treat the destitute and elderly.